The European Commission has approved unconditionally under the EU Merger Regulation the proposed acquisition of ABB’s high voltage cable business and power cable accessories business by NKT after concluding that the merged entity would continue to face effective competition in Europe.
In its investigation, EC looked at the effects on competition of the removal of one competitor, and whether the transaction would make it more likely that the remaining players could co-ordinate their competitive behaviour.
The investigation focussed on the parties’ overlapping activities for high voltage power cables, in particular, on AC submarine power cables and DC submarine power cables. These cables are used to connect transmission grids separated by water and to bring onshore the energy generated by wind farms at sea. NKT is a potential entrant in the market for DC submarine power cables.
Based on the results of its market investigation, EC found that the proposed acquisition would not result in a significant reduction in competition and that a number of strong competitors will remain post-transaction.
Significantly, the investigation revealed the recent and successful entry of competitors from Asia, such as LS Cables and Sumitomo. These companies are now helping to drive and ensure competition in the high voltage cable and power cable accessories markets, EC said.
ABB and NKT agreed to the deal in September 2016. The transaction is valued at EUR 836 million.
ABB’s cable system business offers turnkey solutions including design, engineering, supply, installation, commissioning and service.
The segment had adjusted standalone revenues of EUR 470 million in 2015, employs around 900 people, and has manufacturing and R&D capabilities for high-voltage submarine and underground cables in Karlskrona, Sweden.
The transfer of assets also includes a new, EUR 124 million cable-laying vessel, currently under construction and expected to be delivered in the first quarter of 2017.
The transaction is expected to close in the first quarter of 2017.